I had a landman come visit us about a month ago or so wanting me to sign an addendum to expand our pooling acres from 340 to 1240~, he has yet to return but I figure he will here soon enough. We have a nice size piece of land over 75 but less than 150 acres.
He informed me that I have no choice if I want my royalty payments. He also insisted that they would offer nothing, and they would just not drill on us (hence us not getting payments).
Do I have any ground to stand on, do they ever negotiate when this happens? I am not inclined to believe anything they tell me for obvious reasons.
Gulfport is who were dealing with, they bought the lease from someone else.
In my opinion....you have ground to stand on......and should be compensated.
If they want/need you....they will make a deal with you.
If you push to far.....they can and will exclude you ( drill around you, or drill some place else).
There are 1,000,000 s of acres out there to be drilled.....they can wait you out
Thank you paul, now the battle is finding the line between getting the best offer, and getting nothing. I have no idea what they're thinking personally but it seems like bad business to side step millions in revenue for a little up front bonus.
Has anyone had experience on what sort of compensation has been offered?
i have heard of some getting minimal $$ for signing a similar addendum........but not many.
there many sites where units are 1,200ish acres but also quite a few that are split into 600ish to the north and 600ish to the south...........so they can deal with smaller units, but you have 340 in your lease so that may be difficult for them to work with.
i would ask them to give you seperate $$ offers to ammend 1,200ish -or- 600ish.
maybe not cash, maybe some better terms to be included in the ammendment..........but be careful that they do not slip in some negative terms.
i'm not convinced that there is a major downside to ammending to 1,200ish acres - as long as they don't slip other bad stuff in there with the ammendment.
We tried to do better terms and that got shot down faster than we could finish the sentence. I guess we will find out how it goes.
Thanks for the info :)
I learned from union negotiations that when you open up a section of a contract for amendment, the entire contract is opened for amendment. That means that both parties now have an opportunity to submit any kind of changes that they would like.
Use it to your advantage. Your signature has value. The other side will definitely use it to their advantage.
Try to work with as many neighbors as you can. The more acreage you get, the more leverage you will have. They do not need to be contiguous to have an impact on drilling plans. Just work together.
Great info from everyone above, the fact they have 136k acres in Ohio alone to drill should buy THEM some time. This is not entirely a bad thing though. It's easy to wait when the difference can be hundreds of thousands over a very short amount of time.
Let them expand your pooling size, this means you participate in more wells. Your compensation will be the higher royalties, expanding pooling size IMHO does not earn you compensation otherwise. 340 acres is not enough acreage to do a successful horizontal well pad, especially if they go in opposing directions from the pad. The operator I am working with has standardized on 1280, as well legs approach 5000' 6-10 well legs would need this space. As you would be in the unit, you earn your share of all production on all wells. They are correct, if you choose not to amend, they would have no choice but to exclude you as you would be the lowest common denominator.
9 years Marcellus Landman
Larry, I know i am in a 500 acre unit. My lease only allows 640. chesapeake approached me on increasing the unit size. My land was HBP through a previous lease where my property was included with 4,500 other acres. one shallow well was drilled to hold all this land. losing out on all that bonus money was a real bummer. If they don't compensate me, that unit will stay that size.